The board of Novartis AG (VTX:NOVN) has announced that it will be paying its dividend of $3.70 on the 12th of March, an increased payment from last year’s comparable dividend. This makes the dividend yield 3.1%, which is above the industry average.

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We like to see robust dividend yields, but that doesn’t matter if the payment isn’t sustainable. Prior to this announcement, Novartis’ dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 38.7% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

historic-dividend SWX:NOVN Historic Dividend February 8th 2026

Check out our latest analysis for Novartis

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $2.52 in 2016, and the most recent fiscal year payment was $4.75. This implies that the company grew its distributions at a yearly rate of about 6.5% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The company’s investors will be pleased to have been receiving dividend income for some time. It’s encouraging to see that Novartis has been growing its earnings per share at 16% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we’ve identified 1 warning sign for Novartis that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.